Tuesday, October 12, 2010

Becoming Wealthy


Warren Buffett speaking to a group of students...Image via Wikipedia
All of us would like to become wealthy. 

Warren Buffet suggested two very simple rules which anyone can follow.

Rule #1: Never lose money
Rule #2: Never forget Rule #1

By following these two rules, he went on to become the worlds 2nd richest man.

How do we lose money? 
1. By spending recklessly. I have seen people spending not only their current income recklessly but also their future income though Credit Cards and Personal Loans. 
2. By not having any value for the money they have. If you do not have value for money then money will not have any value for you and keep evading you. Show respect to money and it will show respect to you. If you wish to check out this point, show lesser respect to your spouse and / or children for a week and see what happens. They will immediately start showing lesser respect towards you.

3. By investing rashly. I have heard people say "I do not have the time. Tell me in two minutes what you have to say and then I will decide what to do". Well, if you do not have time to learn how to save your hard earned money and invest it in the most efficient manner, you will go into retirement with a lot time in hand and no money to enjoy it.

4. Getting swayed. I have seen people who have devoted a few hours in learning how to invest wisely getting swayed by some "confusing point" raised by a friend or relative. In two minutes the friend or relative succeeded in confusing the investor and making them invest rashly in the products suggested by them.

5. Procrastination. "I do not have time", people say. "I'll call back when I find some time". I have seen and heard them saying that while they were watching TV, fishing, relaxing and ...

What can you do about it? Change your attitude !!!

1. Start saving. Save as much as you can while you can.

2. Start showing a lot of value and respect for the money that you already have. By being grateful to what you already have, you will enter an ever growing virtuous spiral of abundance and growth where you will start experiencing abundance of time, money, love, friends and everything else that you need. By not being grateful to what you already have, you will enter a vicious spiral of scarcity where-in you will keep experiencing shortage of time, money, love, friends and everything else.

3. Invest wisely. Devote some time to learn the basics of investing.

4. Do not get swayed by others. I hope you have heard the story about the "Crab Mentality". An international competition was held to decide which country has the best crabs. Everyone sent their best specimens properly packed. Indians sent their crabs in a open basket. The organizers asked the person who brought them "how did you manage to get so many crabs in an open basket without the fear of losing them". The person answered "Sir these are Indian Crabs. The moment one crab starts climbing out of the basket, the others will pull its leg and make sure that it does not escape !!!"

5. Implement what needs to be done today. Tomorrow never comes.
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